Earlier this week, French automaker, PSA Group, dropped a bombshell stating it was discussing the potential acquisition of General Motors’ European subsidiary Opel. The news was followed by an official GM statement confirming the potential sale of its European marque. And with any deal, should it happen, Vauxhall will be included, which rebadges Opel vehicles in right-hand drive guise for residents of the United Kingdom.
Through the multitude of news stories, we’ve seen some heated conversation take place over Opel and GM. So, we’d like to use this space to create the be-all, end-all Opel sale discussion. Should GM unload Opel/Vauxhall from its portfolio of brands? Or, is GM making a foolish move?
The news, in general, opens up many avenues of discussion. What does GM specifically gain? Is the automaker wiping its hands clean of Europe? Does Chevrolet have a European comeback story in the making? And those are just three areas. We haven’t even started on what it means for Buick and Holden globally if Opel becomes French-owned.
However, let’s not forget, the last time Opel turned a profit for GM was around the same time N*Sync and Britney Spears were all the rage. That’s 1999, for those not in the know.
With the brief synopsis on the situation covered, we turn it to you now. Vote in our poll and open up a dialogue in the comment section down below. We’re eager to hear your thoughts.
Comments
Hanging on to brands that do not make money and cost support and resources is how the big three went mostly bankrupt (not Ford, but no one was doing well). Legacy becomes a millstone around the neck. If you cannot fix it, be energetic and spin it off. Otherwise you are asleep at the wheel.
But the decision is all about the numbers and contracts and national tax breaks etc., so this poll is entirely meaningless – but what the hell.
Meanwhile, the Opel I would by instantly if brought back was the GT. Small, gorgeous two seater coupe. What a hot vehicle!!!!! They could “retro” it just like Ford does the Mustang ,and Chevy the Camaro, and I bet it would have a following.
YES. Not just yes. But hell yes ! 3 cheers for Mary. She is the best thing since sliced bread for GM !
The ITEZ (International Technisches Entwicklungszentrum) in Rüsselsheim is the 2nd largest development center of GM, and GM can’t simply cut off its hand by unloading it to PSA and then close the book. GM has just started to supply Holden with rebadged Opels, and the Buick brand also relies mostly on rebadged Opels.
So I think that is more to these talks than shortsighted minds perceive.
I can’t also not believe that GM approached PSA with the idea to sell off the Opel Group GmbH to PSA, but that it was the other way round, both because PSA, the long time larger of the two French automakers, and No. 2 by number of units in Europe, had to see that competitor Renault was moving ahead in sales numbers in Europe for the first time, and was growing worldwide with the Renaul-Nissan-Alliance, and its control over the Russian Avtovaz and the Japanese Mitsubishi Motors, making the “big three” of 10-millionaires into a quartet.
Methinks that this is moving forward to a global GM-PSA alliance modeled on the Renault-Nissan-Alliance, in which the European arm is lead by PSA.
This alliance could also develop a GM-PSA line of light commercial vehicles, from the small one which is currently in common development, replacing the Peugeot and Citroëen derivatives of the Fiat Fiorino, the Fiat sourced Opel Combo (Fiat Dobló) and the Nissan sourced Chevrolet City Express by the PSA equivalent, and the Opel Vivaro and Movana, codeveloped with Renault, by a co-development with PSA, all as world-wide useable commercial vehicles for all sides of the alliance.
Buick would not have thrived without the products from Opel. The real profitability of Opel is diffucult to assess. How much does Opel get for the cars it developped/produces for Buick , Holden and even Chevy (trax) Having said that, Opel products are not always produced in sufficient quantities, compared to leading competitors ( golf, civic, corolla) which affects profitability.
Opel brings a lot to GM via unique vehicles and German engineering. The vehicles they have provided to Buick have been very good. Obviously there are financials to be considered in this decision but my thought would be retain Opel and work on making it profitable. I think the Euro input is worthwhile.
No, and that’s says a spanish boy, me.
Opel and Russlesheim`s I+D Center are the joker cards for GM.
GM only must plays a bit better with this cards. good played; Opel is a potential winner
Well you should put in a choice of waiting for the real accurate complete details before making an informed decision.
As of now no one and I mean none of us know the full details on this and that mean none of us can make an accurate rational choice.
It is time to let this play out and just see what is going on and get the real facts vs crying the sky is falling.
scott3 – I agree but there are some significant issues that have been confirmed up to today 17.02.17. There is a $2b valuation of GME which is $1b more than was being rumoured before, PSA have confirmed they will keep the Vauxhall & Opel brands which is sensible, surprisingly they have also stated they will keep the current management. This is extremely unusual in a “distress” takeover of this kind &size, especially as most industry watchers point to this as being an issue that was part of the problem. Slightly more tenuous is the claimed assurances given to the UK government that “there are no plans to rationalise the Vauxhall operations in Britain”. Similar assurances have been given to the German government regarding Opel’s factories. All fair enough, BUT if your going to pay GM an awful lot of dollar and not change anything significantly it begs the question what is PSA getting out of this deal – apart from becoming the No2 auto maker in Europe. It seems like there is some very big news yet to come.
My gut speculation from the start was that this was an end around to makes some changes with how Opel operates in Europe.
GM is limited to what they can get done. No union breaks and no government breaks have been give or even expected to be given to GM. Over the year they have been hard lined by both.
Now if they sell the company to PSA new unions deals with some of the unions will need to be made and since PSA is Euro Union based they would be granted some government breaks that GM would not get.
PSA operates Opel for a few years and while getting the breaks in place then GM buys it back at a higher cost as much of the over head and over capacity has been removed. This higher sale price will give PSA operating capital they need.
GM has had a relationship with PSA and it has not been a bad one. This is a deal GM gets back a company that can turn a profit and PSA get money they desperately need. GM may also share ownership so they could both help each other.
As it is Opel is not going to be fixed as it is not a product problem but it is a operations issues that are not easily undone even by the best management.
If Opel is left to linger as it has it will only stagnate GM stock and continue hurt profits. If a finger is left to wither it will be come infected. I left infected it can kill the hand. Better to lose a finger than the hand.
Now deals like this would not have happened 50 years ago but today you have the goofy Euro Union agreements and you also have an auto industry that has to help each other now to control cost.
Who would have ever expected GM and Ford to work together on transmission development.
Now that is speculation. It also is not a plan GM would make public so if this is going on we will not hear about it and just have to watch it unfold.
But there are other deals and things that may come into play. There is talk GM was going to buy Jeep and some other things out there that most are false but at least one may be true.
The worst case is GM can do anything Opel has or can in Detroit, Korea and now China. Many of these designs are done globally now with the web so they work as they say a 24 hour clock on development.
Opel’s contribution is small as if they are values at $2B that is not hardly the cost of designing a new model car. Many programs cost more than Opel is worth.
Much of the low value is the fact they make no money and they really have small sales overall. I know some want to get sentimental but the reality it would not be difficult to replace Opel and it would save a lot of losses. I don’t want to see them sold but like Pontiac if they are not carrying their fair share you can no longer afford to carry divisions not paying their ways.
Today it is not enough to just make a profit you have to maximize profits. This is way some models are not built and why others are. We see more CUV models as they can sell 200K units over 60K coupes.
Opel has been a sore spot since the bail out and it has needed addressed. Europe is not an easy place to make money as an automaker and that is why most of them are trying to sell more cars else where. Emission laws. Labor laws and the Euro Union regulations have made it a very unfriendly place to make products. Socialism has not totally figured out companies are not endless pits of money to extort.
There are just a ton of things that can happen here and we really do not know much about what is going on. What we do know Opel can not continue as it has as lost too much money already. As for options for GM to change that they are limited in Germany and in the Euro Union on what all they can do. Also the Unions prove to be a problem too.
It took chapter 11 to reset things here but over there that is not an option.
I would recommend all just sit back and watch to see what happens and then address the criticism or praise to what is really going on.
While this is an emotional topic for some we all need to think about this economically as that is why it is going down. Emotions have no place in hard solid business decisions.
two corrections:
1st: when Opel gets a new owner, the union does not need to make new contracts with Opel. Why shold they? Opel factories in Germany at least are covered by the corresponding regional contracts, and that is it.
2nd: after the Wall Street crash of 2008 which nearly destroyed the world economy, also Opel did go thru a process which corresponds roughly to the US “Chapter 11”. Opel got loans from the government, and GM with cooperation of German authorities started a search for possible buyers.
FIAT’s Marchionne was rebuffed right away, out of deep seated negative national sentiments in Germany against Italy, but a contract to sell Opel off to a combination of Magna with the Russian Sberbank was about to be concluded when GM decided to keep Opel. It was too valuable for them.
I’d say no because that would kinda leave Buick in a clueless area as most Buicks are based on Opels. Only Opel’s as of right now have the chassis and engines worked out to have a sportier ride. But if they do sell off Opels, that also mean that Chevrolet needs to have everything worked out and ready for Europe. Which also means they have to have performance versions of their passenger cars as well like a successor to the Cobalt SS (I’m looking at you Cruze and Sonic SS).
Chevy is DOA in Europe. For Dog’s sake it’s dead here. People don’t get excited about owning a Chevy as much as end up with one. It’s a McBrand domestically. That said —
— there’s always a chance things could change for Chevy. The Bolt (and Volt) are amazing cars and indicate a fascinating turn in the road for Chevy. And the Cruze (got I HATE that name) doesn’t suck. Still no matter how fancy and healthy and inspired the food could become in McDonalds —
— you’re still stuck with that McBranding problem.
I’d certainly argue that point John. Chevy is far less of a “McBrand” in the US than Toyota and Honda. With Corvette and Camaro there is plenty of performance and, as you mentioned, the technology of the Bolt and Volt is amazing. The Cruze is a solid compact and the Equinox and Traverse (in particular the 2018 models) are very solid SUV’s. Chevy’s US sales are very strong and all of their models are greatly improved since the GM restructuring. I know a lot of people that are excited with their Chevy. And the Chevy lineup offers pretty much anything one would want short of high-end luxury.
Since I made up a term I should specify what it means. McBrand = A brand so familiar to America it’s almost impossible to update or make exciting.
McDonalds. Burger King. Sears. Microsoft. NBC Television. Maxwell House.
These brands are McBrands. They’re stuck. If they innovate too much they alienate their fanbase. JCPenney learned this the hard way. And so, again, they’re stuck.
Is Honda bland? God yes. Is it stuck? No. It can do a nutty thing here and there. Just like Toyota. They’ve been embraced by America but they’re not Grandma and Apple pie. Honda and Toyota are not equated to Sears. They are revered as quality and value.
Chevy isn’t Sears . But it’s quality and value are in question. Sure — GM can J.D Powers and Associates us to death with their ads stocked full of real actors — but this type of approach would require about ten more YEARS to take hold. Providing J.D. still likes them in 2027, that Consumer Reports RAVES about Chevy at that point, and that the bees are still alive by then.
And once we grant Chevy is regrettably a McBrand — we then must face that Chevy is entry level. By its own proud admission. Chevy really wants you to visit a Buick Dealer. Or maybe buy a Cadillac.
The problem today is all the cars are pretty much similar and pretty much boxed in by regulations and cost of development.
Also they are all of similar quality anymore. When Detroit lost the edge we had some pretty ragged cars. You have to have a pretty compelling product today to move people from one to another brand. If people are happy they are loyal.
To make the car more compelling it is difficult as Aero limits styling. Weight limits size and cost limits many features when it comes to the volume brands.
Today it is much more difficult to win over buyers as it is so difficult to be unique, affordable and meet the regs.
Just look at crash testing now. Companies have to have so much room between the hood and the engine now. So now we have so many taller nosed cars.
It is not only more expensive today to build cars but it is more difficult than it ever has been.
Toyota is like Mc Donalds. People are happy but not thrilled but satisfied with price and they know what they will get for that price.
Now say Wendys offers a Ruth Criss steak and I mean a good NY Strip. People will be excited and say that is a wonderful steak but in the end they do not go there because Wendys is charging the price for that steak as Ruth Criss does. Chevy could do many things like a SS Malibu etc but if you do it right then it cost so much few buy. Not many people in the market for a $40K Malibu. So they just refresh the CUV models and add a couple more. Boring but comfortable and roomy. They hold a good measure of utility and that connects with the public.
Then you have to come up with a design on a two box vehicle that is appealing. That is like stuffing a fat woman in a bikini. While not bad looking most are not interesting as say like a 63 Riv was in its day.
At this point Chevy just needs to focus on N America and the other markets they are in. N America and China are the only two markets of must be in while the rest are add on volume and sales. When most of these markets sell less cars than California they really matter much less than we often realize.
“Chevy is far less of a “McBrand” in the US” — sure, but not in Europe.
Chevrolet was introduced in Europe as the new name for Daewoo.
From a given date on, the Daewoo factory would simply stick the “Chevrolet” badge on the same cars which to the previous day were branded “Daewoo”. The same cars, just a new brand name.
Those were at the lowest end in the prices scales.
This was quite helpful during the “cash for clunkers” scheme in Germany, when a large number of people who had never bought a factory new car, only 2nd hand cars, for the first time could afford a new car, and this boasted the number of Dacia and Daewoo/Chevrolet cars in Germany.
After months of suggested Fiat mergers/takeovers & knock backs this has come out of the blue, GM didn’t need Fiat because Vauxhall & Opel have the Adam & GM got rid of Pontiac & Oldsmoblie so Fiats Dodge & Chrysler divisions wasn’t wanted ether. So what dose PSA bring that’s so important & why the urgent need to sell
If GM bails out of Opel/Vauxhall it simply admits that they do not have the skills to run in a competitive important market.
Any thoughts of sliding in with Chevrolet fail to recognize that they will have no distribution network, starting from scratch. At least in the past Daewoo had paved the way for Chevrolet’s entry.
Where is some coherent global vision from GM?
I agree with you LouisF
Believe it or not, a lot of the GM cars globally (that are successful) were developed at the Opel Headquarters in Germany and they were never paid for that!
When it comes to technology, quality and design, there is no other entity within GM that could offer the same.
Just have a look at the new Opel Insignia and compare it to the Chevy Malibu – nothing more to say. Nobody will buy a Chevy in Europe! Even a Cadillac doesn’t look better! And that brand wants to compete against premium brands such as Mercedes-Benz, BMW or Audi. Forget it! Made in America is not famous over there (except of Tesla, but that’s just for the moment as they don’t have competition yet).
So I guess a lot of the successful 2016 GM result is coming from Opel. And a lot of people at GM in Detroit will see that in a while. So Ford will be the only American car brand in Europe, competing against the Asian brands, nothing more! That’s it!
I have hope that PSA will be a much better home for Opel. They can share all platforms and will become the 2nd biggest car producer in Europe. The Europeans should be smart enough to find the right segmentation between the different brands. But even better, they will hopefully understand how to improve the image of a company and not destroy it (as GM did over the last 25 years).
I wish GM and Opel all the best for the future, but I am strongly convinced, GM is going to make the biggest mistake in its history.
This.
Why did GM buy Vauxhall in 1925 & Opel in 1931? Because they wanted a established European marque/s & couldn’t crack the market with Chevy & Caddy. Chevy & Caddy have tried at least 7+ times to crack Europe at last attempt 2015 Chevy sold 12 cars in the UK. Why give up on GM’s core brands which have served GM through good & bad times trough the decades, as history has proved Europe was & still is a hard market to attack GM needs Vauxhall & Opel & Vauxhall & Opel need GM we’re a family.
Why did GM buy Vauxhall in 1925 & Opel in 1931?
Because that was GM’s way to grow. GM came into existence not by an organic growth of one company, but by cobbling together several companies and continuing to do so internationally.
Ford on the other hand built a new Ford factory in Germany (in the 1920ies), whereas GM bought out the Opel family from what was not only Germany’s but also Europe’s largest automobile manufacturer.
BTW, GM/Opel did everything they could to get the contract to build Hitler’s Volkswagen or People’s Car, but did not succeed.
As a replacement they could build the truck factory in Brandenburg and build the Opel Blitz as the Wehrmacht’s transport back bone. But the Brandenburg factory came to lay in the Soviet occupation zone and was completely demounted to be rebuilt somewhere in the USSR.
I am well aware of the history of GM & all the past marques that’s disappeared such as the many sub brands such as Viking, la salle etc in fact Pontiac, Oaklands subsidery brand ousted Oakland. GM over the years have axed many brands but they’ve always kept their key brands because although it may go against trends to have a global brand, GM is what it is a company built up of brands. On one final thought historically GM has 3 global brands that have each at one point or another sold globally, they are Vauxhall, Opel & Chevrolet.
Why not hang on to Vauxhall? Brexit would matter less with a separated Opel and Vauxhall. Ask Jaguar to let them sell a sedan or F-Pace re-badge and let HSV put LT1s in some. Also, I have to wonder how important shopping for GM’s EV tech is in the Opel sale. I’m inclined to like a JV better.
Tata, the owner of Jaguar, is already building a new factory in Slovakia, the European country with the highest number of cars built per capita.
The GM factories in Ellsmere Port and Luton are the two smallest Opel factories by the number of cars built. And most of their product goes to the continent. The automobile factories on the island are all part of an internationally integrated production process distributed over various countries, and the Brexit is breaking that. The Brexit effect would rather be to shut down those factories or reduce them to CKD assembly just for the British market or shut them down completey since their production process would become to cumbersome and too expensive (the Brexiters don’t understand the slightest thing of economy).
I think the Opel plant in Eisenach Germany is the smallest GME car plant by production volume, it is also without a press shop!
Your thinking was led astray by your imagination.
Look at the latest available “Opel Facts and Figures” for 2014, downloadable from www .opel .com on page 32, “OPEL/VAUXHALL VEHICLE PRODUCTION 2013/2014 BY PLANTS”
(sorry, WordPress does not enable tables in user comments)
factory product 2013 2014
Ellsmere_Port Astra_J 73,434 77,870
Luton Vivaro 43,650 43,729
Eisenach ADAM 53,778 58,614
Eisenach Corsa 49,656 60,125
——- —– ——– ——-
Eisenach total 103,474 118,739
I hope your computing skills did not yet brexit into Trumpland, so that you will admit that 77,870 is a smaller number than 118,739.
Right?
And in the integrated distributed manufacturing, an assembly plant does not need a press shop. The pressed body parts will be delivered by train. The disruption of this distributed manufacturing by GB leaving the European Union puts the GM plants on the island into jeopardy.
The theoretical maximum output for Ellesmere Port stands at 250000 units PA. The plant output for 2016/2017 is 120000 units, I don’t know how the rail transportation of every single body panel impacts cost per car, but I’m sure it has an impact, as does the high labour cost. I voted remain by the way, how many German built Vauxhall’s do you think sell in the UK and achieve a profit? Now add a 10% import tarrif!
Those figures are in Britain not so easily obtainable as in Germany.
But you may count all the Insignias, Zafiras (Rüsselsheim) and Adams sold in Great Britain. As to the other models they might come from Spain or Poland, some Corsas also from Germany.
Its an integrated shop. Engines come from Poland, Austria or Hungary, other special parts from Kaiserslautern. It’s all “Made in Europe”. Plus some more as the Opel Karl or Vauxhall Viva from Korea, and a number of the Mokkas.
BTW, those 10% import tarrifs would apply also to the parts delivered from the continent for those cars being assembled on the island. Only about a third of the car components are sourced from the island, according to newspaper reports I had read.
But tariffs are no longer the main barrier to trade, but technical regulations and certifications. The crazy Brexiters don’t understand that. They don’t realize that even with tariff barriers erected for a splendid isolation, Britain would still remain a part of the European common market, because she has converted its industry to the common European standards since the early 1980ies. That is not so easily going away. Should post-Brexit Britain then insist on requiring the own national product certifications instead of common European ones, things would get very expensive on the island. Perhaps some global products would not get certified for the small British market because of the high costs of certification.
Harmonizing technical regulations and certifications was a main goal of TTIP.
Because more E.U built cars are imported into the UK than are exported from the UK to the E.U, any associated reciprocal tarrif on those Europe bound vehicles can be refunded by the U.K and the U.K government would still see a net gain in taxes. Also automotive parts would be taxed at a lower level than a fully assembled vehicle, as the content of value added work is less.
That is most foolish move gm did. 1st was saab,2nd pontiac,3rd holden. 4th opel. Who is next? Maybe GM Korea. Good job government motors. Without opel they would make terrible small car, agian. Do you remember cobalt (neither ss), cabilier? I betting on it.
Do GM not care as to the damage done to public relations & the brands reputation? We’ve got Holden not sure of it’s future & now Vauxhall & Opel. Obviously they don’t know of Peugoets reputation in America & probably don’t care, it’s probably all down to money & yes I understand the need to make a decent profit, yet in this there should be a desire to build the best something to which GM & many rival manufactures do but not Peugoet & yet GM want to merge/takeover whatever it is with them. Peugoet are the laughing stock over here, bottom of the pile, I cannot see this ending well & the uncertainty isn’t breeding confidence in the whole escapade. The future looks bleak – several crappy cars similar to each other & bland, with exciting concept cars regularly shown off at shows but will never make production – just a teaser to try to keep the enthusiast interested.
A bad idea, how about the engineering and R&D of Opel and its role it has in GM. Opel engineers take part in developing Delta platform, Buicks and Holden cars. How about the development of ecotec four cylinders engines and diesel engine. GM can’t let Opel know how go to Peugeot. It. Will be a strategic mistake
GM has simply given up on managing in Europe. If Ford, Nissan, VW etc etc can manage plants in Europe, then the problem for GM is not Europe, it is the management. And clearly GM management has failed, I would say, because of the German end which engineering wise is top-notch but clearly not on the ball when it comes to keeping costs down.
Vauxhall works well. It has a high market share, its British plants are efficient and its reputation is growing. That will sadly count for nothing as the French government will expect a rapid closure of Ellesmere Port and Luton vans – especially after its failed in its attempts in 2015 to close Nissan Sunderland down.
The reason British plants like Luton cars were closed and not German plants was because bluntly it is cheaper to close a British plant than a German one (three times cheaper). That is why Luton cars was closed – and I have that on the highest authority from a senior GM finance officer. The German government would also be upset by closures in its country while the British government would not be upset by factories closing in Britain. Reducing factories reduces union membership – unions are hated by the British establishment. Reducing manufacturing opportunities reduces the incomes of the working class making them more desperate for the zero-hours work favoured by the British establishment as the raison d’etre for we proles. The British government behind closed doors is probably toasting the inevitable closure of Luton vans and Ellesemere Port. Maybe, just maybe Brexit might encourage people to question why for thirty or forty years they have been governed by governments that seem to have a ‘Britain Last’ policy…